America's Yawning Racial Wealth Gap
This August marks the 50th anniversary of the historic March on Washington for Jobs and Freedom. Best remembered for Dr. King’s “I Have a Dream” speech, the march served as a catalyst for national action on poverty and economic injustice. Though we have seen progress since 1963, the economic component of King’s civil rights agenda remains very much unfinished. Today, the gaping economic disparities between the rich and the rest in the United States are even more pronounced for African-Americans.
Since the 1980s, as inequality has increased dramatically in the United States, there has been a steady increase in the racial wealth divide. Before the Great Recession, middle- and high-income African-Americans saw their levels of wealth stagnate or decrease, while middle- and high-income whites their wealth increase over the last 30 years. Since the beginning of the Great Recession in 2007, the gap has only widened. On average, white families have more than $113,000 in wealth, whereas African-Americans have an average of less than $5,700.
Things looked much more hopeful half a century ago. A year after the March on Washington, President Lyndon Johnson launched his Great Society initiative, which included civil rights, voting rights, and the “War on Poverty.” The Johnson administration and Congress worked to reduce poverty and economic inequities by putting progressive policies in place, raising the minimum wage, and expanding access to health insurance and housing for the poor and elderly.
Just six years later, the progress was striking. By 1970, the poverty rate was at the lowest level ever recorded — down to 12 percent of the population, from 20 percent. Black poverty declined from 55 percent to 27 percent, and African-Americans’ median family income increased by 53 percent.
Yet, after these great successes of the 1960s, the last 40 years have been disappointing in reducing poverty in communities of color. According to the National Poverty Center, in 2010, the African-American poverty rate was 27 percent, and the national poverty rate has increased to 15 percent. More than one fifth of the nation’s children – and a full third of African-American children – live in poverty.
What went wrong? From “trickle-down” economics to discriminatory homeownership policies to predatory lending practices, policies have been implemented that hurt the middle class and the working poor, especially in minority communities. The top 20 percent of Americans earn 50.2 percent of the income, while the bottom 20 percent earns just 3.3 percent. And people of color are still very much on the losing side of this divide.
Growing economic inequality is even more pronounced when it comes to wealth. While income determines the stream of money a household uses for day-to-day living, wealth — accumulated savings and other assets minus debts — determines how well families are able to survive a layoff or a medical emergency. Wealth also determines how easily families are able to invest in college tuition or a down payment on a house — important steps up the economic ladder. Wealth is also vital for retirement security and to pass on to children and grandchildren to help them succeed.
We can fix this. As King put it, “There is nothing new about poverty. What is new is that we now have the techniques and the resources to get rid of poverty. The real question is whether we have the will.”
There are steps we can take now to start to close the wealth gap. We need to hold banks accountable for predatory lending, and demand that corporations implement diverse hiring practices. We need to educate on these issues and reach out to local community groups to call attention to racial and economic injustice. And most importantly, we need to develop the will among our lawmakers and employers to take strong action to bridge racial economic inequality.
© 2013 Politico